National Living Wage job losses more likely at head office

Headcount cuts in the retail sector caused by rises in the National Living Wage (NLW) would affect head office numbers more than the shop floor, say industry leaders.

Research by UK law firm Foot Anstey shows that most retail leaders, if faced with a squeeze caused by the NLW, would rather keep frontline staff and cut back on head office headcount and other expenses.

On 1 April this year the NLW for the over 25s rose from £7.50 to £7.83 per hour, a rise directly affecting around two million low-paid workers. Foot Anstey polled senior leaders in the retail sector on a range of issues for the Foot Anstey Retail Report 2018: People.

When asked, over half (52%) said they would make savings “elsewhere” rather than reduce in-store staffing. That includes savings in head office headcount as well as store investment.

Foot Anstey’s head of retail, Patrick Howarth, said: “It’s not what we expected, but when you look deeper into the research the reason becomes clearer. 

“The abundance of buying platforms means more staff than ever are directly engaged in the business of creating a customer experience which reflects the brand. Business is seeing that as the key differentiator, and know frontline employees are essential to delivering it. What that means is headcount pressures are more likely to be felt elsewhere – namely head office – rather than on the frontline.”

He added: “We are talking about the NLW here, not rent or competition from online which come with their own challenges.”

A further discovery was a near 50/50 split between retail businesses who are open to modern flexible working and those who are not.

Almost all medium and large retailers say their employees are demanding more flexibility, despite the logistical difficulties of flexible working in the retail sector.